I remember seeing a quote recently from Kevin Atticks, Maryland Wineries executive director, about a shortage of grapes in his state. I was reminded of that reading the latest e-letter from Jim Trezise of the New York Wine & Grape Foundation. The other attention-getter was how much the demand is increasing for unoaked Chardonnay, Moscato and sweet red wines.

"On the Cusp of
Shortage" was the title and prediction of a
presentation by Nat DiBuduo of Allied Grape Growers, who is always one of the
featured speakers at the signature "State of the Industry" session during the
Unified Wine and Grape Symposium each January in Sacramento, which draws some
10,000 industry people from all over the world.

Nat
referred to a pending shortage of grapes (good news for growers, who therefore
may get higher prices) despite new plantings, predominantly white varieties and
particularly of Moscato which is soaring among consumers. Jon Fredrikson of the
renowned Gomberg Fredrikson wine consulting
firm echoed that sentiment based on a 4.5% increase in case sales last year (to
345 million) and the fact that the U.S. is now the largest wine market in the
world.

The down side of that for domestic wineries like New York's is that producers
worldwide are now targeting the U.S., especially since its 2.6 gallons of per
capita adult wine consumption is miniscule compared with other countries,
leaving plenty of room for growth. To put the competition in perspective, last
year the federal Tax and Trade Bureau (TTB) approved more than 120,000
different labels.

Jon described the current trend as a "dream market" for consumers, with all
kinds of new products and flavors which often serve as "gateways" for branching
out into other wines. Sales in grocery stores (which are simplest to track)
were up significantly in 2011, including 12% for Pinot Grigio, 64% for Moscato,
101% for unoaked Chardonnay, and 202% for the hot-selling "Sweet Red"
category--proving that many people talk dry but drink sweet.

There are many other bright spots: the large and relatively affluent Baby Boomer
generation predominantly consumes domestic wines; their kids, the Echo Boomers
or Millennials, also comprise a large consumer base that has taken to wine;
direct-to-consumer wine sales are now allowed in 39 states, with New Jersey
being the latest, and that DTC sales channel is growing strongly nationwide; and
wine is increasingly becoming a more integral part of the American lifestyle and
culture.

The bottom line: The outlook for American grape growers and wineries, as well as
consumers, is better than it has been in a long time. Cheers!